"Could" is perhaps the quintessential waffle word. You could find a rare ancient coin while digging in your garden. I could see a UFO if I look out my living room window. Neither outcome is very likely.
So when you read that a given stock could deliver a "fill in the blank" lofty return, it's usually best to take that claim with a grain of salt. However, there are some companies that truly have the potential to be super-successful and produce major returns for their shareholders in ways that require no leaps of imagination to see. Here are three stocks that could realistically turn an initial investment of $300,000 into $1 million by 2030.
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1. Innovative Industrial Properties
A target date at the end of 2030 gives us more than eight and a half years to work with. But turn the clock back and you'll see that Innovative Industrial Properties (IIPR 0.30%) would have turned $300,000 into a cool $1 million in less than three and a half years. That's right -- its shares are trading at more than 4 times the price where they began 2019.
Can Innovative Industrial Properties achieve a return in that ballpark again by the end of this decade? I think so -- and the company really won't have to do anything different from what it's done in the past to make it happen. All that the specialty real estate investment trust (REIT) will have to do is find enough properties to buy from cannabis operators, acquire them, and then lease the properties back to the operators.
Innovative Industrial Properties currently owns 107 properties. That's only a small fraction of the total number of cannabis properties in the U.S. The REIT also only operates in 19 states right now. That leaves another 18 states that have legalized medical cannabis where it doesn't own any properties yet.
Because it's a REIT, Innovative Industrial Properties must return at least 90% of its taxable income to shareholders as dividends every year. Investors who reinvest those dividends would have an even easier path to turning an initial $300,000 investment in this stock into a $1 million holding by the end of 2030.
2. MercadoLibre
My Motley Fool colleague Matt Frankel recently predicted that MercadoLibre (MELI -1.67%) will rank as the third-largest company in the world by 2035. If he's right, there's practically no way that the Latin American e-commerce and fintech leader won't be able to turn a $300,000 investment into $1 million by 2030. After all, MercadoLibre's market cap currently stands at only $57 billion.
I'll admit that Frankel's prediction is a bit of a stretch. However, I do think that MercadoLibre could easily deliver the level of return needed to meet our goal. Its stock more than quintupled in value over the past five years -- and that's with shares now down more than 40% from the 52-week high they set last autumn.
MercadoLibre has only scratched the surface of its opportunities. E-commerce penetration rates in Latin America remain low (9% in 2021), and it is the company that's best positioned to profit as this penetration rate increases.
Its fintech segment also has tremendous potential. A large percentage of the people in Latin America don't have bank accounts. MercadoLibre's Mercado Pago digital payment platform provides an attractive alternative to traditional banking for these individuals.
3. Novocure
Novocure (NVCR 0.32%) stock has increased in value by more than 7 times over the past five years. If we could rewind back to June 2021 and sell at its peak, the stock would have been a 20-bagger. But Novocure's momentum evaporated after that, and its share price has plunged by more than 60% from its high.
The company expects to report results later this year from a late-stage clinical study evaluating its Tumor Treating Fields (TTFields) in non-small cell lung cancer (NSCLC). The therapy applies electrical fields to tumors in an effort to disrupt cancer cell division. Data from two other pivotal studies of TTFields in treating ovarian cancer and pancreatic cancer are on the way in 2023 and 2024, respectively.
If Novocure achieves success in these indications, the company estimates that its total addressable market will be 14 times larger than its current markets targeting glioblastoma and mesothelioma. And it has preclinical evidence supporting the use of TTFields in at least 10 other types of cancer, and has six phase 2 clinical studies underway.
Historically, fewer than half of experimental cancer therapies that reached phase 3 testing ultimately earned approval from the Food and Drug Administration. However, Novocure has already demonstrated that its TTFields therapy does disrupt tumor cell division in other types of cancer.
Granted, Novocure will need some good luck to win approvals in NSCLC, ovarian cancer, and pancreatic cancer. However, I like the company's chances. And I think this stock realistically could be a huge winner over the next few years.
